Source: Securities Star

In recent years, China has been known as the "infrastructure maniac" because of a series of large-scale infrastructure and super projects. Roads and high-speed railways run across the north and south, and bridges climb over mountains and seas, stunning the world.

As a "capital construction madman", active infrastructure investment policies are launched intensively in various parts of our country at the beginning of every year, and this year is no exception. According to incomplete statistics, as of January 10, the total investment scale of major projects in various parts of China has exceeded 3 trillion yuan.

Among them, Hebei, Guangdong, Heilongjiang, Zhejiang, Henan, Jiangsu, Anhui, Shanghai, Sichuan, Xiamen and other provinces and cities held a concentrated start ceremony of major projects, sounding the clarion call for the start of the project in 2022.

From the perspective of investment projects, in addition to traditional infrastructure projects in the fields of infrastructure, people's livelihood and social undertakings, new infrastructure such as 5G network, industrial Internet, Internet of things, artificial intelligence and big data Center have become key investment areas for all parties.

Special treasury bonds are expected to be issued in 2022

The Central Economic work Conference clearly pointed out that economic work in 2022 should be "stable and strive for progress in the midst of stability." Based on this, the current market expectations for stable growth of infrastructure at the beginning of the year continue to rise. Since the beginning of the year, the relevant sectors of the "major infrastructure" of the capital market have been active again.

CITIC recently released a report saying that combined with the actual situation and data analysis, the growth rate of full-caliber capital expenditure for infrastructure construction is 3-6 months ahead of the growth rate of infrastructure. Infrastructure investment is expected to achieve a high single-digit growth of about 7 per cent in the first quarter, and infrastructure growth for the whole year will also have a bright performance of about 6.5 per cent, significantly higher than the same period last year and the whole year (excluding the base).

In addition, considering that the total amount of treasury bonds maturing this year is about 950 billion yuan, and that the issuance of special treasury bonds for infrastructure construction against the background of steady growth can further strengthen the "counter-cyclical" adjustment and increase financial revenue while "reducing taxes and fees", CITIC believes that it is possible to issue special treasury bonds in 2022.

At present, the policy focus on "steady growth" and the issuance of special treasury bonds to make up for deficiencies in capital construction can further strengthen the "counter-cyclical" adjustment, make fiscal policy more positive and promising, and further strengthen the role of infrastructure in stabilizing the economy and promoting growth. If the special treasury bonds are used for infrastructure investment after issuance, assuming that the scale of infrastructure investment reaches 300 billion, the growth rate of infrastructure investment for the whole year is expected to increase by about 1.5% compared with the same period last year.

Cement operating rate recovers

Judging from the government work reports issued by various localities and the work plan for 2022 announced by the local development and reform commissions, actively promoting the construction of the project to ensure a "good start" of investment in the first quarter has become a key task.

From the perspective of infrastructure direction, this centralized construction covers both traditional infrastructure and new infrastructure, both of which have become remarkable features. Traditional infrastructure direction, urban renewal, transportation and urban pipe corridors are the key directions of this centralized construction. Cement and B-end pipes will especially benefit.

From a regional point of view, in the three northern regions, after New Year's Day in central and southern Hebei, some cement enterprises opened the kiln and resumed production, mainly because of the heavy pollution weather, the kiln was stopped vigorously, and the manufacturers opened the kiln to replenish the inventory in the early stage; in central China, New Year's Day in Henan began to open the kiln, as usual, the kiln will be opened in January to resume production, but considering the current demand situation, inventory pressure may force most manufacturers to stop kiln ahead of time. Supply and demand in southwest China are both weak, a number of leading enterprises have lowered product prices, and many provincial markets have continued to decline; in South China, the Pearl River Delta has continuously declined, demand is still weak, and the market has continued to adjust downwards; in East China, many enterprises have listed to revise prices, ranging from 60 yuan to 130 yuan. At this time, the price reduction is in order to continue to adjust prices in the peak demand season after the beginning of spring.

According to a research report by Bank of China Securities, in terms of cement operating rate, the operating rate of the mill and the clinker storage ratio are 53.3% and 56.4% respectively, up 8.3% and 0.3% respectively. The operating rate of the mill has increased a lot, mainly due to the increase in the demand for work before the end of the year.

At present, the price of coal has fallen back to about 820 yuan. Although the price of cement has fallen in the off-season, the price difference between water and coal remains above 300 yuan, which is still relatively high in history, and the profit space of the cement industry is still large.

Real estate and infrastructure are the locomotives that drive the steel and cement markets. if a large number of infrastructure projects can be successfully landed in 2022, it will certainly bring certain benefits to the steel, cement and other building materials industries, but at present, whether they can drive up prices depends on whether infrastructure investment can hedge against the decline in real estate investment.

Northbound funds to increase positions in the infrastructure industry

Judging from the northward capital flow last week, the capital began to significantly favor the traditional infrastructure industry, with the steel, architectural decoration, building materials, machinery and equipment industries all receiving northward capital increase. Among them, the month-on-month growth rates of iron and steel, architectural decoration and real estate industries were 6.72%, 6.67% and 5.97%, respectively.

It is worth noting that Sany heavy Industry, which was jokingly called "Eryi heavy Industry" because of its continuous correction in 2021, received the highest amount of net purchases from northward funds last week, reaching 1.17 billion yuan. In addition, Anhui Conch Cement, China Construction and other infrastructure-related stocks also received a net purchase of more than 100 million yuan from northward funds.

At present, stable investment is the main focus of steady growth, new and old infrastructure work together, and the inflection point of infrastructure has arrived. Minsheng Securities analysis said that taking into account factors such as the fiscal carry-over and the early issuance of special bonds than in previous years, the growth rate of infrastructure investment in the first quarter of this year will be significantly higher than the seasonal growth rate, with a neutral forecast growth rate of 10%.

Infrastructure investment will continue to pick up

On the whole, under the circumstances of long project reserve time and solid foundation, the impact of various disturbance factors on infrastructure investment this year is relatively small.

Xie Yunliang, chief macro analyst at Cinda Securities, believes that in view of the low base, the growth rate of infrastructure investment is expected to pick up significantly in February and March 2022, peaking at 15%, and stabilizing and rebounding in the second half of the year, reaching 7% to 8% for the whole year.

Zhongtai Securities said that under steady growth, infrastructure investment is expected to exceed expectations and attach importance to the infrastructure chain in the short term; it is optimistic about investment opportunities for brand building materials and new materials throughout the year; the real estate chain is expected to be repaired under the marginal improvement of real estate policy. and price increases gradually landing / raw material prices fall, brand building materials gradually enter the layout point, leading high certainty.

Carbon fiber industry, carbon fiber / quartz sand / glass fiber scene demeanor continues, can pay attention to Guangwei compound material, Jilin chemical fiber, Zhongjian science and technology, Hengshen shares, Zhongliang science and technology, Jinbo shares; consumer building materials direction, can pay attention to Beixin building materials, Dongfang Yuhong, Jianlang hardware, three trees, Mona Lisa, Keshun shares; quartz glass industry, you can pay attention to quartz shares, Filihua For the glass industry, you can pay attention to Qibin Group, Southern Glass A,$Lutheran Glass (00868.HK) $、$Luoyang Glass Co. (01108.HK) $。

In addition, the expected marginal improvement of real estate and the acceleration of special bond issuance are expected to support cement demand. The current cement sector has a high performance-to-price ratio, preferably the leader with quantity-increasing logic, you can pay attention to Huaxin cement,$Anhui Conch Cement (00914.HK) $, Tacai Group, Tianshan shares, Shangfeng cement, evergreen; the cost end of the superplasticizer plate is declining rapidly, the first choice is Subert, which has the logic of new category expansion; the direction of the export chain can pay attention to the new walrus materials.